U.S.-Backed Vanmaker Wins What Chrysler Calls Monopoly

Dec. 17 (Bloomberg) -- A startup automaker financed by the
U.S. government won a regulatory decision that Chrysler Group
LLC said will give its competitor a monopoly on selling
wheelchair-accessible minivans to transit agencies.

The U.S. Federal Transit Administration’s decision will
require local providers of transit services for the disabled to
buy vans from Vehicle Production Group LLC unless they present a
compelling reason to buy from another producer.

The agency’s ruling reversed a 2010 order waiving so-called
Buy America rules for transit agencies that get U.S. funds.

“It is great news for us,” VPG Chief Executive Officer
John Walsh said in an interview. “Obviously we’re pretty
excited.”

The agency in 2010 ruled no U.S. company met the Buy
America requirement that vehicles must be assembled domestically
from mostly U.S.-made parts. VPG, based in Allen Park, Michigan,
sought a reversal in August as it started producing wheelchair
vans selling for about $40,000 at an AM General LLC plant in
Indiana that was used to produce General Motors Co. Hummers, a
brand that company shed.

The decision will help VPG, which also makes other
vehicles, gain sales next year as the decision was effective
immediately, Walsh said. VPG produced about 2,500 vehicles this
year and expects that to increase to about 6,000 in 2013, he
said.

U.S. Loan

VPG won a $50 million loan in March 2011 from the U.S.
Energy Department under an alternative-vehicle development
program that’s also backed Ford Motor Co., Nissan Motor Co.,
Tesla Motors Inc. and Fisker Automotive Inc. The program was
criticized during the U.S. presidential campaign by Republican
challenger Mitt Romney.

VPG “just finished” drawing down its Energy Department
loan balance and has begun repayment, he said. The company’s
loan was the smallest and last in the vehicle loan program; the
largest was Ford’s $5.9 billion.

VPG’s petition received more than 830 comments, pitting
Ford Motor Co., auto-industry unions, several members of
Congress and other supporters of Buy America rules against
Chrysler, Thor Industries Inc.’s ElDorado National unit, closely
held Braun Corp. and state and local transit agencies. Thor and
Braun buy vans produced in Canada by Chrysler, import them to
the U.S. and make them wheelchair-accessible.

Ford, Chrysler

The transit agency dismissed Chrysler’s comments that
reversing the waiver would give VPG a monopoly and cause prices
to rise. “FTA notes that the current waiver has served to the
near-exclusive benefit of Chrysler since 2010,” the agency said
in a Dec. 3 Federal Register notice.

VPG will compete against Ford, which makes raised-roof vans
in the U.S., and against about 20 other companies that make
small buses or vans, Walsh said.

“If there was any type of monopoly, it really was for
Chrysler for the past two years,” he said. “They took the
bailout and they moved that plant from St. Louis to Canada, and
it just didn’t sit right.”

“Notwithstanding this decision, Chrysler Group does not
believe the MV-1 vehicle is a good substitute for Chrysler
Group-manufactured minivans, modified through our established
vendors, in serving the needs of disabled customers,”
Mike Palese, a spokesman for the company based in Auburn Hills,
Michigan, said in an e-mail. “The company will continue to work
with our manufacturing partners to ensure disabled customers can
continue to take advantage of the outstanding design and
technology of Chrysler Group-manufactured minivans.”

About 12,000 small buses and vans are bought with U.S.
funds by transit agencies each year, Walsh has said.